Re Willmott Forests Ltd - [2012] VSC 29

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT
CORPORATIONS LIST

No. 6816 of 2011

No. 6762 of 2011

IN THE MATTER of WILLMOTT FORESTS LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 063 263 650)

WILLMOTT FORESTS LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 063 263 650) & ORS (according to the schedule attached)

Plaintiffs

---

JUDGE:	Davies J
WHERE HELD:	Melbourne
DATE OF HEARING:	23 - 25 January 2012
DATE OF JUDGMENT:	9 February 2012
CASE MAY BE CITED AS:	Re Willmott Forests Ltd
MEDIUM NEUTRAL CITATION:	[2012] VSC 29

---

CORPORATIONS – LIQUIDATION – DISCLAIMER OF ONEROUS PROPERTY – Where the plaintiff is in liquidation – Where the plaintiff acts as the responsible entity and manager of registered and unregistered managed investment schemes operated on freehold land and land leased by the plaintiffs to the members of the schemes – Liquidator of the plaintiff wants to sell the freehold unencumbered by the leases – Whether the liquidators disclaimer of the leases would have the effect of extinguishing the Growers’ leasehold estate or interest in the subject land – Corporations Act 2001 (Cth) ss 477, 511, 568

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr P Anastassiou SC with Mr R Craig	Arnold Bloch Leibler
For the Receivers	Ms W Harris SC with Mr T Clarke	Allens Arthur Robinson
For WGG	Mr G Bigmore QC with Mr M Kennedy	Clarendon Lawyers
For WAG	Mr D Denton SC with Mr A Downie	Eales & MacKenzie
For DK Investment Services (an Intervener)	Mr C Coulsen	Morgan Conley

HER HONOUR:

Introduction

The first plaintiff, Willmott Forests Limited (“WFL”) is the responsible entity and/or manager of eight registered managed investment schemes (“MIS”), six unregistered “Professional Investor” MIS, eleven unregistered contractual MIS and five unregistered partnership MIS. These MIS are forestry operations conducted on land which is either freehold land owned by WFL or leased by WFL from third parties. The members of the MIS (“the Growers”) have rights to grow and harvest trees on that land under project documents that include lease and licence agreements with WFL for the use and occupation of the land. WFL is in liquidation and the liquidators have entered into six interdependent contracts (“the sale contracts”) for the sale of part of the freehold land, unencumbered by the rights of the Growers conferred by the project documents, including the leases and licences (“the Growers’ rights”). A transfer of clear title to the freehold land cannot be effected unless the Growers’ rights are terminated or extinguished. On 29 June 2011, the liquidators sought and obtained directions from the Federal Court that they were justified:

a) in amending the constitutions of the registered MIS and the investment deeds of the Professional Investor MIS to confer on WFL a power to terminate Growers’ rights in respect of the MIS, on the condition that Court approval is obtained before exercising that power; and

b) (as the contractual and partnership MIS do not have…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Willmott Forests Ltd

Details

AGLC: Re Willmott Forests Ltd [2012] VSC 29
Case: [2012] VSC 29
Decision Date: 9 February 2012

CaseChat Overview and Summary

Re Willmott Forests Ltd involved a dispute between the liquidator of Willmott Forests Ltd and the Growers, who held interests in land leased from Willmott Forests Ltd. The Growers argued that the liquidator's disclaimer of onerous property, which included the land leases, would extinguish their leasehold interests. The dispute was heard in the Federal Court of Australia.

The primary legal issues before the court were whether the disclaimer of onerous property by the liquidator would effectively extinguish the Growers' leasehold interests and whether the disclaimer was valid under the Corporations Act 2001 (Cth). The court needed to interpret sections 477, 511, and 568 of the Corporations Act to determine the effect of the disclaimer on the leasehold interests.

The court held that the disclaimer of onerous property by the liquidator would not extinguish the Growers' leasehold interests. The court emphasised that the disclaimer only affected the legal relationship between the company and the property, and not the rights of third parties, such as the Growers. The court found that the Growers' interests were protected under the Act and would not be extinguished by the disclaimer. Consequently, the disclaimer was valid, and the Growers' leasehold interests remained intact.

The court ordered that the disclaimer of onerous property by the liquidator was valid and would not extinguish the Growers' leasehold interests. The court further directed that the sale of the freehold land by the liquidator would proceed, unencumbered by the leases, as intended.

Orders